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In First Step Thursday, FCC Could End Nearly All Lifeline Wireless Service on Tribal Lands; Wider Action Set in Motion Could Wipe Out Service for Millions More; Attacks on Lifeline Seen as Overstated, Based on Stale Data

WASHINGTON, D.C.—In an urgent warning issued less than 48 hours before the Federal Communications Commission (FCC) is scheduled to act, three major voices—Consumer Action, the former Chairman of the Oglala Sioux Tribe Utility Commission and the rural-focused National Grange—warned that FCC Chairman Ajit Pai’s attack on the Lifeline program would kill wireless service for most Tribal lands in the U.S. immediately and then for millions of other Americans in the following months.

Linda Sherry, director, National Priorities, Consumer Action, said: “Consumer Action objects in the strongest possible terms to the Orwellian exercise now going on at the Federal Communications Commission under which the FCC would ‘widen the digital divide’…all the while claiming it is doing the exact opposite. Make no mistake about it: The proposal outlined by FCC Chairman Ajit Pai would prove to be ruinous for the Lifeline program. If it would not kill Lifeline outright, it would leave only the faintest shadow of the original program. What we are looking at here is a cynical anti-consumer measure that is being misrepresented as a good government and pro-consumer measure…”

Sherry added: “By barring ‘non-facilities providers’'—that is, wireless resellers—the FCC would knock out four of the five biggest Lifeline wireless providers. In fact, it is estimated that about 75 percent of wireless Lifeline sales are handled by these four providers. So, what has Chairman Pai done here? Has he outright ended the wireless Lifeline program? No…but he might as well do so. Because the effect of killing off the companies serving three out of four Lifeline customers will effectively destroy the program. There are no other companies out there that can provide…or are willing to provide…this service to millions of Lifeline customers.”

Noting that wireless Lifeline in most tribal lands could become unavailable soon after the Thursday FCC meeting, Joe RedCloud, former chairman, Oglala Sioux Tribe Utility Commission, said: “The importance of the Tribal Lifeline program for residents of Tribal lands, including the Pine Ridge Indian Reservation, cannot be overstated. The FCC has long recognized the vital role of the Tribal Lifeline program in making telecommunications services affordable on Tribal lands. But, in a proposal to be voted on by the Commissioners on November 16th, the FCC, without consultation with the Tribes, is going to essentially eliminate Lifeline service on many Tribal lands. This would be a travesty for Indian Country because it would turn back the clock to the days of the monopoly provision of Lifeline service where consumers had but one choice for affordable telephone service…”

RedCloud continued: “The situation is even more dire on other Reservations in South Dakota where there are no facilities-based wireless Lifeline providers on seven of the eight other reservations, which is typical of most Tribal lands throughout the United States. Clearly, creating a significant disadvantage for wireless resellers from the Tribal Lifeline market will gravely harm, not advance, universal Lifeline service on Tribal lands.”

Burton Eller, legislative director, National Grange, said: “The National Grange, the nation's oldest rural advocacy organization, is concerned that Federal Communications Commission Chairman Ajit Pai's recent Lifeline proposals would cripple the low-income telecom program by cutting off funding to companies that serve the majority of subscribers. Among his proposals is a plan to eliminate funding for wireless resellers, even though more than 75 percent of Lifeline subscribers currently get services from resellers. This share of the Lifeline market accounted for by resellers is even higher in many rural areas. Today, thousands of low-income families throughout rural America rely upon Lifeline service provided by wireless resellers for affordable telephone service and affordable broadband service.”

Eller added: “From our experience, it's doubtful whether other providers would step in to fill the gap. Before resellers entered the Lifeline service market, there was very little wireless service in rural America that was available and affordable to low-income families. Other carriers demonstrated little interest in serving the rural Lifeline-eligible population. Rural America has benefitted by having several providers, and more choices of service available to low-income households, not fewer. How does it help rural America to go back to those ‘bad old days’? How does cutting off Lifeline phone service for rural America fulfill the goal of universal access to telecommunications service that Congress mandated more than 20 years ago?”

FCC Chairman Pai will ask other commissioners to vote Thursday (Nov. 16) on an overhaul of Lifeline, which provides phones and broadband services for low-income Americans. Even though the program currently serves less than a third of eligible US households, Chairman Pai is seeking to further shrink the amount of available funds for Lifeline. Pai also wants to ban four of the five largest wireless Lifeline providers that currently serve the vast majority of people in the program. Several groups are concerned that the Pai “reforms” are a deliberate effort to kill off Lifeline, leaving no viable alternative for the veterans, senior citizens, disabled, and struggling low-income families that depend on the program for medical care, employment prospects, emergency services, and bridging the homework gap.

The Pai “reforms” ignore a series of major steps that already have been made to make the program more efficient and effective. Sherry noted: “What is so astounding about this is that our reading of the recent Government Accountability Office (GAO) report (on Lifeline) does not lead us to conclude that there is some smoking gun out there showing wireless resellers are the problem. In fact, the GAO report was based on stale 2014 data, before the 2015 Lifeline reforms went into effect. The report says that the supposed one-third-is-fraudulent number that you hear about was based only on a small sample and cannot be extrapolated to the whole program…The GAO report neglects to mention that the fraud and abuse level with Lifeline has been much lower than the comparable numbers for Medicare, Medicaid, and veterans programs. Perhaps Chairman Pai favors terminating those programs as well. We don’t know.”

Sherry continued: “Here is what we do know: Mobility is what Lifeline consumers want. If Chairman Pai or others feel differently, they shouldn’t try to insert their judgment for consumers’. After all, aren’t these folks the ones who tell us all the time about the virtues of free markets and letting consumer choice rule? We worry that Chairman Pai has either not thought through the consequences of these proposals or he is simply motivated by a desire to upend the so-called ‘Obamaphone’ program, which was started under President Reagan and expanded under President George W. Bush. What about the huge parts of rural America now served only by resellers? What about most of Native American Tribal areas across the United States that are only served by resellers today? What happens to these people who rely on Lifeline for emergency services, telehealth and closing the homework gap? Chairman Pai would do well to remember that the FCC works best when it focuses on the ‘real people’ who have to live with the Commission’s decisions. Lifeline consumers have spoken and they want the service provided by wireless resellers.”